Employment Contracts Act (ECA), adopted in December 2008 and entered into force in July 2009, consolidated version including amendment of 28 April 2017, effective since 8 May 2017.
The link provided is in English, updated up to 2012
Date:28 Apr 2017; view website » (view in NATLEX »)
Equal Treatment Act [ETA], dated 11 December 2008 (RT I 2008, 56, 315), entered into force 1 January 2009
Date:11 Dec 2008; view website » (view in NATLEX »)
Individual Labour Dispute Resolution Act [ILDRA], dated 20 December 1995, consolidated version dated March 2003
Date:29 Mar 2023; view website » (view in NATLEX »)
Size of enterprises excluded (≤): none
Workers' categories excluded: managerial / executive positions
Art. 1(5) ECA
FTC regulated: Yes
Arts 9 and 10 ECA.
Valid reasons for FTC use: objective and material reasons
Art. 9 ECA: It is presumed that employment contracts are made for an unspecified period. A fixed-term contract may be made for up to five years if it is justified by good reasons arising from the temporary fixed-term characteristics of the work, especially a temporary increase in work volume or performance of seasonal work. A FTC may also be concluded for the replacement of an employee who is temporarily absent.
New in 2012
The 2012 amendment has modified the ECA which now in addition to what is stated above states that if duties are performed by way of temporary agency work, an employment contract may be entered into for a specified term also if it is justified by the temporary characteristics of the work in a user undertaking. (Art. 9 ECA)
Maximum number of successive FTCs: 2
Art. 10 ECA: If an employee and an employer have on more than two consecutive occasions entered into a fixed-term employment contract for similar work or extended the fixed-term contract more than once in five years, the employment relationship shall be deemed to have been entered into for an unspecified term from the start. Entry into fixed-term employment contracts shall be deemed consecutive if the time between the termination of one employment contract and entry into the next employment contract does not exceed two months.
New in 2012
The 2012 amendment has modified the ECA which now in addition to what is stated above states that if duties are performed by way of temporary agency work, the restriction on consecutive entry into or extension of an employment contract for a specified term provided for in subsection (1) of art. 10 shall be applied to every user undertaking separately (Art. 10.2 ECA)
Maximum cumulative duration of successive FTCs: 10year(s)
Arts. 9 and 10 ECA: A fixed term employment contract can be entered into not longer than 5 years and such contract can only be renewed once. Therefore the maximum cumulated duration of successive fixed term contracts is 10 years (5+5 years).
% of workforce under FTC: 3.4
Source: Eurostat, for the year 2014.
The figure refers to the percentage of employee with a contract of limited duration (= temporary job) of total number of employee aged 15-74 years.
Eurostat data are based on the following definition:
"A job may be considered temporary if employer and employee agree that its end is determined by objective conditions such as a specific date, the completion of a task or the return of another employee who has been temporarily replaced (usually stated in a work contract of limited duration). Typical cases are: (a) persons with seasonal employment; (b) persons engaged by an agency or employment exchange and hired to a third party to perform a specific task (unless there is a written work contract of unlimited duration); (c) persons with specific training contracts."
Maximum probationary (trial) period (in months): 4 month(s)
Art. 86 ECA
Obligation to provide reasons to the employee:
Art. 95(2) ECA.
Art. 95(2) ECA.
Under the ECA, an employer can terminate an employment contract (referred to in the law as "extraordinary cancellation") only for a good reason as provided for in this Act and in accordance with the statutory prior notice requirements (art. 87 ECA).
The ECA provides a list of valid reasons for termination of employment by the employer which fall within 2 categories: reasons relating to the employee personally (art. 88 ECA) and economic reasons (art. 89 ECA).
Reasons relating to the employee personally:
- decrease in capacity for work due to the state of health,
- decrease of capacity for work due to insufficient work skills, - breach of duties,
- appearance at work in a state of intoxication,
- commission of a theft, fraud or an act bringing about the loss of the employer's trust in the employee,
- bringing about a third party's distrust in the employee,
- wrongfully causing damages to the employer's property,
- violation of the obligation to maintain confidentiality or violation of the restraint of trade clauses.
- if the continuance of the employment relationship on the agreed conditions becomes impossible due to a decrease in the work volume, reorganisation of work or other cessation of work (lay-off).
The Equal Treatment Act prohibits discrimination on the grounds of of nationality (ethnic origin), race, colour, religion or other beliefs, age, disability or sexual orientation in certain areas including in relation to employment and specifically refers to termination of employment (see art. 1(1) together with art. 2(1)2) and 2(2)2) ETA).
In addition the Gender Equality Act establishes the prohibition on discrimination based on sex (which also cover pregnancy and child-birth, parenting, performance of family obligations or other circumstances related to gender, and sexual harassment) in the professional life including in relation to termination of employment (see art. 6(7) of the Act)
Specific prohibited grounds for dismissal:
Art. 92 ECA prohibits dismissal for the following reasons:
- the employee is pregnant or has the right to pregnancy and maternity leave;
- the employee performs important family duties;
- the employee is not able, in the short term, to perform his/her duties due to his/her state of health;
- the employee represents other employees;
- a full-time employee does not want to continue working part-time or a part-time employee does not want to continue working full-time;
- the employee is in military service or alternative service.
If an employer terminates the employment contract of a pregnant woman or a employee raising a child under three years of age, it is presumed that such termination was based on pregnancy or family responsibilities, unless the employer proves that termination was based on a reason permitted under the ECA. Similarly, if an employer terminates the employment contract of employees' representative during their term of office or within one year of the expiry of his/her term of office, it is presumed that such termination was based on the fact that he/she represents other employees unless the employer proves that termination was based on a reason permitted under the ECA.
- Pregnant women and workers with family responsibilities:
Art. 93 ECA prohibits the employer from making redundant a pregnant woman or a woman who has the right to pregnancy and maternity leave or a person who is on parental leave or on adoption leave, except in the event of cessation of activities or bankruptcy.
In addition, its is prohibited to dismiss a pregnant woman or a woman who has the right to pregnancy and maternity leave due to a decrease of the employee's capacity for work.
These prohibitions only apply if the employee has notified the employer of her pregnancy or the right to pregnancy and maternity leave before receipt of a cancellation notice or within 14 days thereafter.
- Workers' representatives:
Art. 94 ECA provides that before terminating an employment contract with the employees' representative, an employer must seek the opinions of the trade union or the employees who elected him/her the person to represent them or the trade union. The employer is required to take that opinion reasonably into account and to provide justification if he/she disregards the employees' opinion.
Notification to the worker to be dismissed: written
Art. 95(1) ECA.
Art. 97(2) ECA:
The notice period to be given by the employer in the event of termination of employment (referred to 'extraordinary cancellation') varies according to the employee's length of service, as follows:
1) less than one year of employment: at least 15 calendar days;
2) one to five years of employment: at least 30 calendar days;
3) five to ten years of employment at least 60 calendar days;
4) ten or more years of employment: at least 90 calendar days.
Note advance notice for terminating the employment of an employee during the probationary period must be at least 15 days (art 96 ECA).
tenure ≥ 6 months:
tenure ≥ 9 months:
tenure ≥ 2 years:
tenure ≥ 4 years:
tenure ≥ 5 years:
tenure ≥ 10 years:
tenure ≥ 20 years:
Pay in lieu of notice: Yes
Art. 100(5) If an employer or an employee gives advance notice of cancellation later than provided by law or a collective agreement, the employee or the employer has the right to receive compensation to the extent to which they would have had the right to obtain upon following the term of advance notice.
Notification to the public administration: No
Notification to workers' representatives: No
No general obligation to notify the employees' representatives except if the employer intends to dismiss an employee's representative. Art. 94 ECA provides that before terminating an employment contract with the employees' representative, an employer must seek the opinions of the trade union or the employees who elected him/her the person to represent them or the trade reasonably union. The employer is required to take that opinion reasonably into account and to provide justification if he/she disregards the employees' opinion.
Approval by public administration or judicial bodies: No
Approval by workers' representatives: No
Definition of collective dismissal (number of employees concerned):
Collective cancellation of employment contracts means cancellation, due to redundancy and within 30 calendar days, of the employment contracts of at least:
1) 5 employees in an enterprise where the average number of employees is up to 19;
2) 10 employees in an enterprise where the average number of employees is 20-99;
3) 10 percent of the employees in an enterprise where the average number of employees is 100-299;
4) 30 employees in an enterprise where the average number of employees is at least 300.
Art. 90 ECA.
Prior consultations with trade unions (workers' representatives): Yes
Art. 101 ECA: Before an employer decides on collective dismissal, he/she shall consult the employees' representatives or if there are no representatives, with each of the employees well in advance with the aim of reaching an agreement on the prevention of the planned dismissals or reduction of the number of dismissals and mitigation of their consequences, including job-seeking assistance or re-training of the employees to be made redundant.
For the purposes of consultations, the employer shall provide the employees' representatives in a timely manner with any and all necessary information about the planned collective redundancies. The employer shall submit, in a format which can be reproduced in writing, the following information:
1) the reasons for the collective dismissal;
2) the number and job titles of the employees;
3) the number and job titles of the employees and the criteria for selecting the employees to be made redundant:
4) the period during which the employment contracts are to be terminated;
5) the method of calculation of the compensation to be paid to the employees in addition to the benefits provided by law or the collective agreement.
Notification to the public administration: Yes
Arts. 101(3) and 102 ECA:
The employer is required to submit and information about the collective dismissals and information about consultations to the structural unit of the Estonian Unemployment Insurance Fund in writing.
Notification to workers' representatives: Yes
Art. 101 ECA.
Approval by public administration or judicial bodies: No
Since the entry into force of the ECA (July 1st, 2009) approval by the administration in no longer required. Note that, under the previous Employment Contract Act (1992), before undertaking collective dismissals, the employer had to obtain the approval from the Labour Inspectorate.
Approval by workers' representatives: No
Priority rules for collective dismissals (social considerations, age, job tenure): Yes
Arts. 89(4) and 89(5) ECA: during the redundancy selection, the employer must respect the principle of equal treatment. Workers' representatives and workers raising children under three have the preferential right of keeping their job.
Employer's obligation to consider alternatives to dismissal (transfers, retraining...): Yes
Art. 89(3) ECA provides that before terminating an employment contract on the grounds of redundancy, an employer shall, where possible, offer another job to an employee, except in case of bankruptcy. An employer shall, where necessary, organise an employee's in-service training or change the employee's working conditions, unless the changes cause disproportionately high costs for the employer.
See also art. 101(1) ECA: Before an employer decides on collective dismissal, he/she shall consult the employees' representatives or if there are no representatives, with each of the employees well in advance with the aim of reaching an agreement on the prevention of the planned dismissals or reduction of the number of dismissals and mitigation of their consequences, including job-seeking assistance or re-training of the employees to be made redundant.
Priority rules for re-employment: No
There is no general right to severance pay upon dismissal except in the event of economic dismissal (see below).
tenure ≥ 6 months: 0 month(s)
tenure ≥ 9 months: 0 month(s)
tenure ≥ 1 year: 0 month(s)
tenure ≥ 4 years: 0 month(s)
tenure ≥ 5 years: 0 month(s)
tenure ≥ 10 years: 0 month(s)
tenure ≥ 20 years: 0 month(s)
Art. 100 ECA: upon termination of employment due to a lay-off, the employee is entitled to one month's wages.
tenure ≥ 6 months: 1 month(s)
tenure ≥ 9 months: 1 month(s)
tenure ≥ 1 year: 1 month(s)
tenure ≥ 2 years: 1 month(s)
tenure ≥ 4 years: 1 month(s)
tenure ≥ 5 years: 1 month(s)
tenure ≥ 10 years: 1 month(s)
tenure ≥ 20 years: 1 month(s)
- Non-economic dismissal: no severance pay
- Economic dismissal: redundancy pay = 1 month's salary.
It is worth noting that, in the event of termination for economic reasons, the Estonian Unemployment Insurance Fund shall pay an additional compensation to the employee which varies according to the employee's length of service, as follows:
* from 5 to 10 years of service: one month's average salary,
* Over 10 years: 2 months' average salary,
Compensation for unfair dismissal - free determination by court: No
Art. 109 ECA. There are statutory amounts of compensation for unfair dismissal (in lieu of reintegration). However, it is worth noting that such amounts (3 or 6 months' wages depending on the categories of employees - see below) can be modified by the court or the labour dispute committee.
Compensation for unfair dismissal - Legal limits (ceiling in months or calculation method):
- In the event of an unlawful dismissal, if so requested by either party, the court or the labour dispute committee can terminate the employment contract as of the time when it would have been terminated in the event of the validity of the cancellation. In such cases, the employer shall pay 3 months' wages. This amount can however be modified by the court or the labour dispute committee, considering the circumstances of the dismissal and the interests of both parties.
- If the unlawful dismissal affects a pregnant woman or a woman entitled to maternity leave as well as an employee's representative, compensation in lieu of reinstatement shall be 6 months' wages. This amount can however be modified by the court or the committee.
When compensation is awarded, the employee can not claim the payment of loss wages from the date of the dismissal until the court's or the committee's decision.
Art. 109 ECA.
Reinstatement available: Yes
Art. 107 ECA: If the court or the labour dispute committee establishes that termination of employment is void due to the absence of a legal basis or the non-conformity with law or nullified due to a conflict with the principle of good faith, it shall be deemed that the employment contract has not been terminated and therefore the employee is entitled to return to work. In such cases, the employee is entitled to the payment of loss wages form the time of the dismissal until the reintegration of his/her former position.
Preliminary mandatory conciliation: No
1) If possible, a disagreement arising from the employment relationship of an
employee and employer is resolved by agreement of the employee and
employer through the mediation of a representative of employees or a directing
body of a union or federation of employees.
2) In order to resolve a disagreement, an employer, in co-ordination with a
representative of employees or a directing body of a union or federation of
employees, may establish a conciliation committee, the membership, competence
and procedures of which are determined by agreement of the employer and the
representative of employees or directing body of a union or federation of employees.
3) Attempts to resolve disagreements by agreement do not deprive the parties of the
right of recourse to labour dispute resolution bodies in order to resolve a labour
4) Parties have the right of recourse to a labour dispute resolution body without the
mediation of a representative of employees or a directing body of a union or
federation of employees if they find that a labour dispute cannot be resolved by
Competent court(s) / tribunal(s): ordinary courts
There are no specialized labour courts in Estonia. All labour disputes lie within the jurisdiction of general courts. Disputes relating to termination of employment shall be heard by the court or a labour dispute committee (arts. 105-109 ECA).
Labour dispute committees are independent, extra-judicial individual labour dispute resolution bodies which are established within the local branches of the Labour Inspectorate. They are composed of three members: the chairperson of the labour dispute committee and representatives of employees and employers (arts. 10-11 ILDRA)
Existing arbitration: No